Thursday, February 7, 2008

three factors for China smooth growth pattern

--The 2007 growth of 11.4 per cent, although robust, is not as high as the peak of the 1980s and ’90s, when GDP growth in some years surpassed 15 per cent.

--Jonathan Anderson of the investment bank UBS says China’s boom-bust cycles of those two decades are being wound back into a more sustainable pattern.
--He points to three factors helping to smooth growth cycles: improved corporate management skills, the declining role of the state in the economy and better financial institutions after recent reforms.

--“That explains why growth in the past three years has been 11 per cent and not 15,” said Mr Anderson. He added that the overcapacity of the past three years, which has fuelled the trade surplus, is now being squeezed out of the economy. The huge profits, which have funded investment, will also come back “to historical norms”.